McClelland v. Gronwaldt

• Decision Date: 16 November 1995
• Docket Number: No. 1:95-CV-931.,1:95-CV-931.
• Parties: Jerry C. McCLELLAND, Plaintiff, v. Robert C. GRONWALDT, Individually and as Agent for Mobil Oil Corporation, Mobil Oil Corporation, and National Union Fire Insurance Company of Pittsburgh, Pennsylvania, Defendant.
• Court: U.S. District Court — Eastern District of Texas

909 F. Supp. 457

Jerry C. McCLELLAND, Plaintiff, v. Robert C. GRONWALDT, Individually and as Agent for Mobil Oil Corporation, Mobil Oil Corporation, and National Union Fire Insurance Company of Pittsburgh, Pennsylvania, Defendant.

No. 1:95-CV-931.

United States District Court, Eastern District of Texas, Beaumont Division.

November 16, 1995.

Glen W. Morgan, Reaud Morgan & Quinn, Beaumont, TX, for Jerry C. McClelland.

Gerald Wayne Riedmueller, Lipscomb Norvell, Jr., Benckenstein Norvell & Nathan, Beaumont, TX, for Robert C. Gronwaldt.

Amy Dunn Taylor, Michael Thomas Powell, Dean Schaner, Robert L. Levy, Timothy T. McInturf and Lisa A. Dreishmire, Haynes & Boone, Houston, TX, for Mobil Oil Corporation.

Alison H. Moore, Harrison Henry Yoss, Robert Wellenberger, Allison Moore, Thompson Coe Cousins & Irons, Dallas, TX, for National Union Fire Insurance Company of Pittsburgh, PA.

MEMORANDUM OPINION

COBB, District Judge.

BACKGROUND

In December 1992, the Plaintiff Jerry McClelland filed suit in the 58th Judicial District, State District Court of Texas. Plaintiff alleged a breach of the duty of good faith and fair dealing, violation of Article 21.21 of the Texas Insurance Code, negligent handling claims, and intentional infliction of emotional distress arising from improper handling of Workers' Compensation claims and conspiracy. The Plaintiff sought certification of a class of similarly situated plaintiffs and certification was finalized on October 10, 1995. On July 26, 1995, the Plaintiffs sought and received a Temporary Restraining Order from the state district court which prohibited the Defendants from contacting potential members of the certified class with respect to releasing their claims. There was no Collective Bargaining Agreement (CBA) in existence which could have been affected at that time. This order expired of its own terms 10 days thereafter.

On September 27, 1995, another TRO was sought and granted along with the Plaintiffs application for a temporary and ultimately a permanent injunction. This case was removed the day before the hearing on the temporary injunction, which was the 20th day after the injunction was sought. There was a CBA which was dated September 1, 1995 which probably became effective September 17, 1995.

For the past several years Mobil has been undergoing a nationwide restructuring. As part of this process, Mobil revised and implemented an Enhanced Separation Benefits Package (ESBP) which allows employees who separate from the company for reasons other than cause to be eligible for certain benefits. The ESBP is available to non-union workers. (Defendant's Supplemental Brief in Response to Motion to Remand, p. 7). As part of the restructuring of the Beaumont plant, Mobil made the ESBP available to non-union employees who voluntarily separated from the company.

For union members, separately negotiated agreements provide benefits for those employees who volunteer to separate from the company. Mobil successfully negotiated such an agreement with the members of the Oil, Chemical, and Atomic Workers International Union (OCAW or Union). The benefits provided to these employees are similar to those provided under the ESBP. However, there is nothing in this agreement which speaks to the administration of the program. The Memorandum of Agreement (MOA) between Mobil and the Union was signed on September 1, 1995, became effective either on that date or on September 17, 1995, and the election period under the MOA expires on November 17, 1995.

Both the ESBP and the MOA require employees to sign Separation Agreements which contain broad waiver-of-claim language.¹ Under both programs, the broad language makes it difficult to know exactly which claims are being waived by the individual signing the Separation Agreement. In implementing its restructuring plan, Mobil is seeking waivers from some employees who are also members of the certified class. On September 27, 1995, the Plaintiffs applied for another temporary restraining order and temporary and permanent injunction and the Defendants removed to this Court asserting that the matter was preempted by either the Employee Retirement Income Security Act (ERISA) or the Labor Management Relations Act (LMRA) or both.

TIMELINESS OF REMOVAL

Plaintiffs assert that Defendants have made an untimely removal and that this Court must remand the case to the state district court. This is incorrect. The first date the case became removable was September 27, 1995 when the Plaintiffs sought a temporary restraining order from the state court "preventing Mobil from continuing with this particular program to the extent it requires releasing causes of action that the plaintiffs may have." Plaintiffs Motion for Temporary Restraining Order, p. 1. Until then, there was not a CBA or an ERISA plan which was being affected by state court action or state law. The removal was filed October 17, 1995, well before the 30 day deadline imposed by 28 U.S.C. 1446. The notice of removal was timely filed and all defendants have timely joined in the removal.

ANALYSIS

Where removal of a state court action is based on the presence of a federal question, the federal question generally must appear on the face of the complaint. Caterpillar Inc. v. Williams, 482 U.S. 386, 391, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987). The defendant's assertion of a federal defense is normally an insufficient basis for removal. Id. at 393, 107 S.Ct. at 2430. The specific exception to this general rule is where an area of state law has been completely preempted by federal law. Id. Claims which concern ERISA and the LMRA are considered to be preempted under this particular rule. See Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 108 S.Ct. 1877, 100 L.Ed.2d 410 (1988) (Preemption by Section 301 of the LMRA); Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (ERISA preemption). This Court must determine whether either ERISA or the LMRA are implicated by the Plaintiffs Motion for Temporary Restraining Order.

ERISA

Is the Severance Plan an ERISA Plan?

Whether the Defendant's incentive attrition plans (the ESBP for non-union employees and the MOA for union) are governed by ERISA turn on whether they are employee benefit plans within the meaning of 29 U.S.C. § 1003(a). Severance pay plans may constitute ERISA plans. See Massachusetts v. Morash, 490 U.S. 107, 116, 109 S.Ct. 1668, 1673, 104 L.Ed.2d 98 (1989). However, the fact that a claim may involve "benefits" is not conclusive that an ERISA "plan" is involved. See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 7-8, 107 S.Ct. 2211, 2215, 96 L.Ed.2d 1 (1987). "In Fort Halifax, the Supreme Court held that an employee benefit `plan' encompasses only those benefits that require the establishment and maintenance of a separate and ongoing administrative scheme." McLemore v. United States Fidelity & Guaranty Co., 829 F.Supp. 192, 195 (citing Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987)). The Supreme Court held that a one-time, lump-sum payment triggered by a single event requires no administrative scheme. Fort Halifax, 482 U.S. at 12, 107 S.Ct. at 2217-18.

A review of the cases applying Fort Halifax to severance pay plans or statutes, demonstrates that the characterization of these arrangements as governed by ERISA has hinged on the amount of employer discretion involved in providing payment. See, e.g., James v. Fleet/Norstar Financial Group, Inc., 992 F.2d 463, 468 (2d Cir.1993); Gray v. Quaker Fabric Corp., 809 F.Supp. 163, 167 (D.Mass.1992), aff'd, 6 F.3d 849 (1993). Courts have generally held that a plan requires the establishment and maintenance of a separate and ongoing administrative scheme only if the plan administrator must make discretionary decisions based on subjective criteria.

For example, in Pane v. RCA, Corp., 868 F.2d 631 (3rd Cir.1989), the Third Circuit affirmed the district court's ruling that a severance plan set up to retain company executives during a merger was an ERISA plan. The lower court relied on the fact that, under the severance plan, the employee was entitled to benefits only if he or she was terminated for reasons other than for cause. Thus, "the circumstances of each employee's termination had to be analyzed in light of certain criteria, and an ongoing administrative system constituting an ERISA plan existed." Pane, 667 F.Supp. at 171. See also Bogue v. Ampex Corp., 976 F.2d 1319 (9th Cir.1992), cert. denied, 507 U.S. 1031, 113 S.Ct. 1847, 123 L.Ed.2d 471 (1993) (ERISA plan exists if plan administrator must determine "substantially equivalent employment" to continue eligibility under plan.); Gray, 809 F.Supp. at 166-67 (Massachusetts severance pay statute preempted by ERISA because, as in Pane, plan administrator had to decide whether employee's termination was involuntary in order to determine eligibility for benefits).

Conversely, in Fontenot v. NL Industries, Inc., 953 F.2d 960, 961-63 (5th Cir.1992), the Fifth Circuit held that a "golden parachute" program providing severance pay for executives who were terminated within two years of a change of control was not an ERISA plan because eligibility for the program was based on objective criteria. Thus, the Court held that for the employer to make payments under the plan, it was not required to establish a separate and ongoing administrative scheme. The Court reached this conclusion despite the fact that the severance pay plan provided for a three year continuation of certain benefits to the eligible executives. The Court distinguished Pane on the basis that the circumstances of each employee's eligibility in Pane had to be analyzed in terms of certain subjective criteria which did require the establishment of an administrative scheme. See also James, 992 F.2d at 467 (the fact that employees had different termination dates, different eligibility, and that payments had to be...